Mar 13, 2019 07:45 AM EDT
IKEA is a massive company that generally designs and sells furniture that can be easily assembled by the buyers. It was founded 1943 in Sweden and is successfully operating until the present. The Swedish company has franchise branches across different countries. Its popularity is evident from the constant mention of the brand in countless present-day television shows. Some of its most popular models are the Billy bookcase and the Malm bed.
The basic idea was for buyers to visit IKEA showrooms and compare assembled models. An unassembled kit of their chosen furniture model would be packed for them to take home or would be delivered to their address. This has been the trend and flow of furniture retail for a very long time.
However, last year in 2018, the retail giant suffer a major financial blow prompting the need to reevaluate their business strategies. Shifting from a purely retail system, IKEA has decided to adapt furniture leasing for 2019. This strategy is two-pronged as it allows to deal with the disruption the company experienced in 2018, and it also gives them the chance to shift from a linear to a circular economy system.
The trend, as observed, is that more people are opting for leased products. IKEA is not the first company to adapt to a circular economy. An example is a cab-hailing system like Uber where more operators prefer to lease a vehicle as this allows them to update their technology and keep their machines up to date.
IKEA's Product-as-a-Service (PaaS) would be put to trial during the year bringing forth a number of great benefits for the consumers, as well as the company.
Perhaps the best one is the increase in their recycling levels. The company would be working towards their ultimate goal which is to keep a closed loop on their materials. This means that IKEA would take up recovering materials which they can repurpose from their used products. This may also open the possibility for IKEA to involve their consumers in developing new products.
The PaaS strategy also allows IKEA designers to improve on furniture longevity, reusability, and material sharing because the furniture would be handed over from one customer to another. The products should, therefore, withstand this change in environment and use. This also means that the designs would be more innovative so that restructuring into a new model design would be possible and easy.
The changes in trends and the demands posed by these changes bring about a disruption in the economy. IKEA has managed to use this disruption to improve its furniture products and retail system altogether.
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